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5 reasons the CFPB needs a Congressional buffer

Why we need a go-between

January 28, 2014
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[Update 1: Point 5 updated with CFPB clarification]

The notion that the Consumer Financial Protection Bureau needs a board to oversee its activities is not popular within the agency. Republicans, on the other hand, use the lack of such oversight as political ammunition.

Additionally, there are several reasons why such an entity could prove to be beneficial.

Setting politics and egos aside for a moment, here's 5 solid reasons there should be a buffer between the CFPB and Congress.

1: The conversation is not constructive it's combative.

CFPB director Richard Cordray lost his composure in front of the House Financial Services Committee today. Granted, his buttons were being pushed.

"These are some of the most offensive questions I have ever heard coming from this Committee," Cordray said.

His predecessor, Elizabeth Warren, levied incredulity in the face of incendiary questions. Anger, Mr. Cordray, does not play as well. As the saying goes, "if you can't take the heat..."

2: This massive database is a huge concern

Cordray took a grilling about its database of consumer info. While the database is more than a year old, its purpose is to support policymaking and regulatory research.

The CFPB said precautions will be in place so individual homeowners cannot be identified through the database or through any subsequent public datasets.

Without proper oversight, we'll just have to take their word for it.

3: 122,000 consumer complaints

Representative Maxine Waters, D-Calif., is right to jump to the defense of the CFPB after today's hearing, their accomplishments, so far, are admirable.

"Despite the Bureau’s extensive engagement with this Committee, over the past few years the CFPB has managed to do more than just testify before Congress," Waters said in a statement. "To the contrary, the CFPB has built an unprecedented record of success protecting our nation’s consumers and service members who have been victimized by unscrupulous corporations and financial institutions."

In short, Congress is not getting the message that the CFPB is working. In fact, there's too much work for just one director, with only more coming. The Bureau's top priority is protecting consumers. The ability to do so could get out of hand with numbers rising and without additional oversight.

4: Fawning media coverage

This Wonkblog coverage on the creation and culture at the CFPB is admirable in many respects. It also represents the general attitude most journalists have towards the CFPB. Why the agency escapes journalistic scrutiny escapes me. HousingWire views the CFPB with the same critical eye as any other regulator, and largely go at it alone.

Therefore, we need someone else to monitor the activity there.

5: Negotiate for peace

Political infighting is coming at the expense of national progress. Republicans used to praise Cordray, but after today, it's clear they're making it personal. The CFPB would counter that it already employs an extensive advisory board and doesn't need further observation of its autonomy.

But that's the problem. My questions are many about this board. For one, whose idea was it to hire 25 people? Why do they think it's OK for taxpayers to pay for this decision? What was the review process behind this decision?

This board needs to be examined. Its very existence needs to be justified and allowing for CFPB oversight to do so would also mollify Republicans.

[Update: The CFPB informs me that the advisory board is a Dodd-Frank requirement, members are unpaid and selected through a public submission process. Proof of this transparency was also provided. Still my opinion that there is merit in gaining bipartisan support of the CFPB remains.]

Regardless of these reasons, I am confident such a board will never come to fruition. And if it does, it will also mean less colorful coverage for the few journalists who actually write critically about the CFPB.

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